India must take note of child policy signalling

An assessment of short and long-term impacts of economy-wide policies and global economic changes and shocks on the domestic economic situation, including energy markets, is important and urgent for the Indian economy. The minutes of the Monetary Policy Committee meeting (28-30 Sept), released by the RBI on October 14, present the best summary of the current macroeconomic situation in India in the backdrop of global developments.

Ultimately, all the impacts mentioned above are captured by price effects and reflected in the periodic inflation measures. Hence, the impacts are relevant for real economic growth, exports and external stabilisation (rupee hitting an all-time low of about 83 against the dollar), and domestic stabilisation relating to containing inflation.

At the same time, assessment of impacts and risks needs to be extended to distributional issues resulting in changes in consumption and prioritised for vulnerable sections of society, viz., the poor, unorganised workers, and dependent population (children and elderly).

This article is focused on children (0-18 years) because of their importance and implications for India’s policy signalling in the context of the Global Hunger Index 2022 (GHI22).

Most of the current debates on the recently released GHI22 centre around India’s score of 29.1 and the hunger level being classified as “serious”. India’s rank is 107 out of 121 countries. All the other BRICS and South Asian countries, among others, are ranked above India.

All four indicators used in this index are child-focused. For instance, undernourishment includes children and the other three indicators are exclusively for children (child stunting, wasting, and mortality). The methodology and data for measurements are transparent and available in the public domain. Further, all indicators are compatible with SDG 2030.

We follow the UN-SDGs 2030 framework as adopted in the Niti Aayog’s SDG India Index 2020–21 for the identification of plausible goals, targets, and indicators for child development related to health, hunger, and nutrition.

In all, nine indicators are identifiable in Goal 1 (No Poverty), Goal 2 (Health), and Goal 3 (Zero Hunger) for children: (i) Percentage of the population (out of total eligible population) receiving social protection benefits under Pradhan Mantri Matru Vandana Yojana, (ii) Percentage of children under five years who are underweight, (iii) Percentage of children under five years who are stunted, (iv) Prevalence of anaemia in women aged 15 to 49 years, by pregnancy status (percentage), (v) Percentage of children aged 6-59 months who are anaemic, (vi) Maternal Mortality Ratio, (vii) Under 5 mortality rate, (viii) Percentage of children in the age group 9-11 months fully immunised, and (ix) Percentage of institutional deliveries out of the total deliveries reported.

These indicators recognise the importance of the interdependency of policies between hunger, health and nutrition, and go beyond the child-specific indicators in GHI22.

Using indicators numbered (i) to (v) for the construction of the Child Health Index and from (vi) to (ix) for the construction of the Child Nutrition Index, the current achievement level of India is found to be 77.89% for the Child Health Index and 33.77% for the Child Nutrition Index.

Thus, more policy efforts are needed to improve child nutrition in order to attain the targets by 2030 as well as to reduce hunger. This is a policy signalling for India.

Essentially, the child welfare effects of inflation operate through budget allocation and spending, especially if the child welfare programmes are dependent on market-price-based public procurement. This can be assessed in terms of reduced real benefits of public expenditure programmes, especially those which are beneficiary-oriented programmes in health, women and child development, education, and nutrition sectors.

In general, the key determinants of beneficiary-oriented programmes are (a) size of benefit, (b) number of beneficiaries, and (c) duration of benefit.

Given (b) and (c), the size of public expenditure benefits depends on the market price of the goods and services. However, with a fixed budget allocation for beneficiary-oriented child development expenditure programmes, higher inflation implies a reduction in the size of real or intended benefits and welfare.

Thus, the key policy challenge is to insulate the inflation effects on public spending or incorporate dynamic changes in beneficiary cost norms in response to changes in inflation.

Size of real benefit losses

As an example, let us consider the Supplementary Nutrition Programme, a centrally-sponsored programme on a sharing pattern of 50:50 by the Government of India and the state governments. Since November 2017, the cost norms (Rupees per day per beneficiary) have remained constant at Rs 8 for children (6–72 months), Rs 9.50 for pregnant or lactating mothers, and Rs 12 for severely malnourished children. A few state governments have generous add-ons. For instance, the Government of Karnataka’s extended benefits under this scheme are Rs 21 for pregnant or nursing mothers, including one full meal as per the Matrupoorna Scheme, and Rs 9.50 for adolescent girls (out-of-school in the 11–14 year age group).

Annual inflation (April-March), based on the CSO’s Consumer Food Price Index (Base: 2012; Combined for Rural and Urban at all-India level), has fluctuated from 1.8% in 2017-18 to 7.7% in 2020-21 and to 8.6% in September 2022. If the beneficiary cost norms were to be adjusted to these inflation rates, the amount of benefit for each beneficiary group would have increased by 28.55%. This implies that real benefits in terms of nutrition intake (in terms of consumption of commodities by prescribed calories of energy, proteins, etc.) must be reduced to equalise the fixed unit cost and rising prices.

However, if adjusted for annual inflation, the nutrition intake remains stable and welfare-neutral by equating between the revised-cost norms and the rising prices.

Ultimately, cost norms must be simultaneously revised by the central government and state governments for all the beneficiary groups in all beneficiary-oriented programmes, like the mid-day meal scheme. Otherwise, cardinal objectives and intended benefits of the revised cost norms may not be realised in terms of performance and outcomes of child beneficiary-oriented programmes.

Thus, positively responding to child policy signalling in GHI22 is both an important and urgent policy imperative for India’s Union and state governments.

(The writer is professor at the Fiscal Policy Institute, Bengaluru)